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II. Accepting Cash Gifts

A. Donation Receipting/ IRS Regulations | B. ECC Receipt Forms | C. Restricted and Designated Gifts | D. Christmas and Special Gifts to the Pastor | E. Memorial Funds | F. Stock as a Charitable Gift | G. Real Estate as a Charitable Gift | H. Tangible Personal Property, Partnerships and Royalties as Charitable Gifts

INDEX

E. Memorial Funds

There are several ways to deal with funds received as memorials. (See job description for Memorial Committee)

• Amounts designated for specific items to be purchased are usually held in an account by the local ministry.
• If a ministry has a large amount of memorial funds on hand- whether designated or not- there are two ways in which Estate Planning Services/Covenant Trust Company can help.

1. Investment Agency Agreement
Under the terms of this formal agreement, Covenant Trust Company provides professional investment and management services for funds deposited by the local ministry. The agreement designates persons from the local ministry who are authorized to request distributions to the ministry from the account, and where distributions are to be sent (e.g. to the ministry's checking account or directly to the ministry). The advantages of the agency account are that 1) the local ministry is relieved of management and investment decisions; 2) the funds are segregated by being deposited in the agency account; 3) there is continuity for the purpose and use of the funds even through changeovers of ministry staff and/or boards. Covenant Trust Company will charge a management fee on the market value of the assets as follows:

There will be a per transaction fee for special services such as electronic wiring of funds to a bank.

2. Covenant Endowment Trust - Under the terms of this formal agreement, an Endowment Fund is established with Covenant Trust Company as trustee. CTC then provides professional investment and management services for funds deposited in the account. (See separate page on Covenant Endowment, Trust for additional information.) The major difference between the Endowment Fund and an agency agreement is that the Endowment Fund pays out a fixed percentage-currently 5%-on a regular basis, while preserving the principal. (Endowment Funds may also be established to pay out principal after a period of years.) The Endowment Fund is an irrevocable gift which means that payments may not be requested as needed, as with the Investment Agency Accounts. The Endowment Fund is ideal for donor-designated or memorial funds which are program- oriented (e.g. camping or educational scholarship assistance, continuing education for staff, missionary support, etc.) Covenant Trust Company charges an annual fee of 1% on Covenant Endowment Fund accounts, which is billed to the account at one quarter of one percent (0.25%) quarterly.

The Covenant Endowment Trust was established to accept gifts of cash or appreciated assets into individual Endowment Accounts which pay an income to a designated Covenant ministry, while the invested principal remains intact. A gift to the Covenant Endowment Trust will benefit the designated ministry for years to come.

Who can set up an Endowment Account? Anyone-an individual, family, or any Covenant ministry (local church, conference, camp, or ECC department.)

Suppose an individual's chosen Covenant ministry already has its own Endowment Account? Can the individual contribute to it? Yes. The individual can write a check payable to the ministry, designate it for the Endowment Account, and mail it to the ministry.

Is there a minimum contribution? The minimum needed to establish an Endowment Fund is $5,000, with additions in amounts of at least $1,000. Contributions to an existing Endowment Account may be made in any amount directly to the ministry. When they accumulate a total of $1,000 or more, the ministry will deposit them to the Endowment Account.

How does the Endowment Account work? Quarterly income payments are made to the Covenant ministry designated by the Endowment Fund. The principal remains intact, and hopefully grows to provide even larger income in the future.

What are the advantages of the Covenant Endowment Trust? The written agreement which directs the use of the funds for each Endowment Fund remains on file, providing both continuity and assurance that the funds will always be used for their intended purpose. As Trustee, Covenant Trust Company (CTC) provides professional management and investment services which may not be available or affordable to the local ministry.

How does this help the local Covenant ministry?

• Relieves the local ministry of investment decisions
• Protects donor-designated funds from being depleted for other uses
• Provides a regular income, which should increase over time

Does CTC charge a fee for managing the Endowment Account? Yes. An annual fee of 1 % is billed to the account at one-quarter of one percent (0.25%) quarterly.

Are individuals' gifts to the Covenant Endowment Trust tax deductible? Yes. Gifts to the Covenant Endowment Trust are irrevocable, so they qualify for a charitable contribution deduction on federal income tax.

How long will the Endowment Account last? Account may be established in perpetuity (forever) or for a term of years, after which the principal is distributed to the designated Covenant ministry.

Covenant Endowment Trust
The Covenant Endowment Trust (CET) was established to accept gifts of cash or appreciated assets into individual Endowment Accounts earmarked for the Covenant ministry of your choice. Any Covenant ministry (local church, conference, camp, institution, or ECC department) or individual can set up a named Endowment Account. A minimum of $5,000 is needed to establish the Endowment Account, and additions may be made in amounts of at least $1,000.

How does the Covenant Endowment Trust work? Under the terms of this formal signed agreement, a named Endowment Account is established with Covenant Trust Company as trustee. CTC then provides professional investment and management services for funds deposited in the account. The Endowment Account pays out a fixed percentage-currently 5%-on a regular basis, while investing with the objective of preserving the principal. (Endowment Funds may also be established to pay out principal after a period of years.) The Endowment Fund is an irrevocable gift which means that payments may not be requested as needed, as with an Investment Agency Accounts. The Endowment Fund is ideal for donor-designated or memorial funds which are program oriented (e.g. camping or educational scholarship assistance, continuing education for staff, missionary support, etc.) Covenant Trust Company charges an annual fee of 1% on Covenant Endowment Fund accounts, which is billed to the account at one quarter of one percent (0.25%) quarterly.

Covenant Endowment Trust assets are invested for growth, with the objective of providing increased future income. The quarterly distributions described above are normally made from income. If income falls below 5%, principal is added to make the distribution. Any income in excess of 5% is added to the invested account principal to provide a larger base for future earnings.

Advantages of Covenant Endowment Trust are similar to those of the Investment Agency Agreement:

1. The local ministry is relieved of management and investment decisions;
2. The funds are segregated by being deposited in the Endowment Account;
3. There is continuity for the management of the funds and for the purpose and use of the funds even through changeovers of ministry staff and/or boards.

For further information, contact your regional Covenant Estate Planning Officer(see Seminars for listing), or call Covenant Trust Company at 800-483-2177.

(All material is presented for educational purposes only, and represents our current understanding based on information received from our tax and legal advisors. It is meant to provide information about the various personal, tax and economic benefits which may result from different estate planning and planned giving ideas. Because situations differ, it is important for you to have an estate plan specifically designed to fulfill your objectives. Nothing in this material is intended as legal, tax or investment advice. Laws and procedures are constantly changing, are subject to differing interpretations and may vary from state to state. If you require legal, tax or investment advice, you should consult a competent attorney, tax or investment advisor.)